Health Insurance Options After Retirement but Before Medicare

Retiring before age 65 can feel exciting, but it also raises an important question: how will you cover health insurance until Medicare begins? Fortunately, there are several paths to consider.

• Coverage from Former Employer (Retiree Insurance)

Some employers or unions offer retiree health plans.  Check with your previous employer’s benefits administrator to find out if this is offered and what the terms and costs will be.  Often, you must meet age and service requirements to qualify.  As you approach age 65, make sure you check to see how these plans coordinate with Medicare.

• COBRA Coverage
  If you retire from a job that offered health insurance, you may be eligible for COBRA. This allows you to keep your employer’s plan for up to 18 months (sometimes longer if certain conditions apply). The downside: you’ll pay the full premium, including what your employer used to cover, plus a small administrative fee. It’s often expensive, but it provides continuity of care.

• Spouse’s Employer Plan
  If your spouse is still working, you may be able to join their plan. This option can be more affordable than COBRA, especially if the employer subsidizes family coverage. Always compare premiums, deductibles, and networks.

• Affordable Care Act (ACA) Marketplace Plans
  Through the Marketplace, you can shop for individual coverage. Premiums are based on age, location, and income. Importantly, retirees with moderate incomes may qualify for premium tax credits that significantly reduce monthly costs.

• Private Individual Insurance
  Outside the ACA Marketplace, private insurers sell individual plans directly. These may offer different networks or benefits, but they generally don’t qualify for federal subsidies. For higher-income retirees who don’t qualify for Marketplace credits, comparing private plans can make sense.

• Short-Term Health Insurance
  Short-term policies are designed to bridge gaps, lasting up to 4 months. They are usually cheaper but provide limited benefits. Many exclude pre-existing conditions, prescription coverage, and preventive care, so they work best as temporary protection rather than a long-term solution.  They are not available in all states.

• Health Share Plan

These are technically not insurance but a group of members who pool their money to cover medical care for each other.  If this is an option for you, carefully review the eligibility rules, costs, and what the plan will cover.

• Part- Time Job with Benefits

This option of course requires an individual to continue to work in some capacity but maybe in a position with fewer hours and more flexibility.  If you pursue this route and are claiming social security, make sure you check to see if this could cause your benefits to be reduced or taxable.

• Medicaid

Medicaid provides free or low-cost coverage to certain individuals that meet qualification rules.  Consult the rules to see if this is a potential option for you.

Key Considerations

• Estimate how long you’ll need coverage before Medicare starts.

• Compare premiums, deductibles, and provider networks across options.

• Consider your expected healthcare needs—such as prescriptions or ongoing treatments—before choosing.

• Re-evaluate annually, since ACA Marketplace plans and subsidies can change.

Bottom Line
The years between retirement and Medicare require planning, but with these available options, you should be able to find a solution that balances cost with peace of mind until Medicare begins at age 65.  Please let us know if you have any questions.